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Speaker 1: Live from the Heartliner and the Crossroads of America. It's

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Speaker 1: Tony Katz today. Six people indicted by the grand jury. Good,

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Speaker 1: thrilled to see it, Tony Katz, Tony Katz today, good

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Speaker 1: to be with you. We're talking about this beatdown that

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Speaker 1: took place in Cincinnati. This man who was attacked by

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Speaker 1: a mob. This woman who was knocked unconscious, she is

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Speaker 1: lucky to be alive. Yes, there was a verbal altercation

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Speaker 1: with the man. Yes, a fight ensued, Yes, things then

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Speaker 1: God said, yes, he was then attacked. I absolutely am

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Speaker 1: convinced of it, based on Rachel lines by a crowd.

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Speaker 1: This is what happened. I'm not saying that the guy

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Speaker 1: who got attacked did everything perfectly. I am saying the

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Speaker 1: end of the story was Rachel ten percent, no question

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Speaker 1: about it. None. Also, it was a violent attack in

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Speaker 1: people attacking people. Watched and we spoke about this this

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Speaker 1: yesterday where this woman is saying that people should be

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Speaker 1: charged if they don't help, if they don't call nine

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Speaker 1: one one, and I said, I disagree with this. I

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Speaker 1: disagree with this because you can't legislate morality. You cannot

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Speaker 1: tell people that if they don't engage, they will be soon.

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Speaker 1: Now there are good Samaritan laws and all sorts of

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Speaker 1: things that are out there. But this woman's argument is

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Speaker 1: I'm surprised I'm not dead. I should have been dead.

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Speaker 1: And people were filming with their phone instead of instead

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Speaker 1: of helping, and they should be fined or or they

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Speaker 1: should be charged. And my argument was no, no, they shouldn't.

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Speaker 1: And some people email me and they disagreed with me. Guys,

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Speaker 1: you go right ahead, tonyotonikats dot com. Feel free. I mean, well,

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Speaker 1: that's what we're here for, right like, we're here to

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Speaker 1: talk to each other, we're here to share. I don't

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Speaker 1: mind if there's disagreement. I read some of the emails

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Speaker 1: and thought about it. I will tell you I still

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Speaker 1: think that I'm right here. You can't legislate morality. Our

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Speaker 1: issue is not a legal one. When a woman is

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Speaker 1: being attacked and grown men stand by, and this isn't

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Speaker 1: the first time we've seen it, it's cultural. What kind

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Speaker 1: of society do we actually have when that takes place?

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Speaker 1: When that happens, how can it be a society that thrives?

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Speaker 1: And my argument is, of course it can't be. You

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Speaker 1: think you can legislate that into being better, not a chance,

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Speaker 1: not a chance? Can that take place? You cannot legislate

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Speaker 1: this into some better results. If you could, San Francisco

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Speaker 1: would be better. In Los Angeles be better, In New

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Speaker 1: York would better. In DC would be better. Also, I

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Speaker 1: shouldly should say I'm not gonna be surprised if the

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Speaker 1: federal government does make a move on DC. I'm not

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Speaker 1: gonna be surprised if it happens. But if Trump makes

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Speaker 1: that move, well then it's on Trump to make everything better.

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Speaker 1: If you do it, you actually have to now go

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Speaker 1: about doing the thing. I remember, DC its future is

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Speaker 1: decided by the federal government, right, it's budget, it's everything else.

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Speaker 1: So they could, if you will, take over the city.

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Speaker 1: But you can't legislate these things. This is a cultural issue.

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Speaker 1: It's a cultural disaster. This is about parenting. This is

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Speaker 1: about masculinity. But there are also women here who were charged.

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Speaker 1: This is about a series of things. And some people

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Speaker 1: are saying, well, Tony, you mean this is about black culture.

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Speaker 1: See I don't think this is about black culture. I

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Speaker 1: know people disagree with me about this as well. I

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Speaker 1: think this is about liberal culture because I know plenty

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Speaker 1: of black families that would it be doing this in

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Speaker 1: any situation. So how do I call it black culture? No,

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Speaker 1: I don't think that's it. As a matter of fact,

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Speaker 1: I often think that that's just like a like a

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Speaker 1: easy way out. I think I think it's deeper than that.

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Speaker 1: This is about morality. And you could argue that that's religion.

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Speaker 1: You can argue that that's culture. But this is about

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Speaker 1: how do you sit idly by while a woman is

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Speaker 1: being attacked? And the answer is you don't. If you

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Speaker 1: are able to help stand up to it, you have to.

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Speaker 1: But that can't be legislated. That's my argument. That's all.

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Speaker 1: But that these people are being charged with alleged felonious assault,

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Speaker 1: three charges of assault and two charges of aggravated riding.

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Speaker 1: Okay by me, Fine by me. I'll be very happy

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Speaker 1: to see these people go to jail. This is Tony

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Speaker 1: Katz today. So I'd read this report that Toyota was

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Speaker 1: down in its earnings and they were changing their projection

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Speaker 1: and really their whole outlook, and it's because of tariffs.

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Speaker 1: But everything you heard over the last couple of weeks

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Speaker 1: is that tariffs are not having an effect because GDP

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Speaker 1: GROSSMESI product is a three percent and you take a

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Speaker 1: look at the market, and the market is in this

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Speaker 1: incredible spot. And then I see some things from EJ

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Speaker 1: and Tony, the chief economists at the Heritage Foundation, and

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Speaker 1: I say, I'm not I like that the economy is

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Speaker 1: doing better than I thought it was doing. But I

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Speaker 1: can't get anybody to sell me on the idea that

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Speaker 1: everything is great. All Right, we already talk about the

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Speaker 1: divide between Wall Street and Midwest Main Street. That much

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Speaker 1: is absolutely true, But what about the divide between what

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Speaker 1: I see and what I know? Tony Kats Tony Katz today,

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Speaker 1: good to be with you, EJ. And TONI joins us

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Speaker 1: right now. He is the chief economist at the Heritage

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Speaker 1: Foundation Heritage dot org. And I want to kind of

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Speaker 1: reverse the conversation here by going over some things that

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Speaker 1: you tweeted that made me say, okay, is this proving

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Speaker 1: my own thesis, my own philosophy that what I'm told

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Speaker 1: versus what I see doesn't jive that things are better

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Speaker 1: than we thought they would be. But maybe things aren't great,

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Speaker 1: or does this mean things are excellent? There comes a

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Speaker 1: moment where it's too many numbers. Let me get into

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Speaker 1: what I mean here. EJ. You posted this, You started

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Speaker 1: with this post right here, and you said, can we

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Speaker 1: just fire the Board of governors at this point? And

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Speaker 1: I thought that was a really kind of fascinating thing

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Speaker 1: to say. This is remittance remittances due to the US

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Speaker 1: Treasury in millions of dollars, and it is basically, starting

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Speaker 1: in twenty twenty three, a straight line down. What the

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Speaker 1: heck am I looking at here?

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Speaker 2: Well, Tony, these are essentially all of them moneies that

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Speaker 2: the FED should have been paying to the Treasury. A

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Speaker 2: lot of people are surprised to learn this, but the

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Speaker 2: FED actually turns a small profit because of the nature

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Speaker 2: of its operations. All of those profits, however, once it

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Speaker 2: clears its operating expenses, have to be turned over to

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Speaker 2: the Treasury. It's not as if the FED, even though

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Speaker 2: it is a private corporation, it's not as if the

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Speaker 2: FED gets to keep those profits. However, beginning in September

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Speaker 2: of twenty twenty two, the FED stopped having any profits

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Speaker 2: at all, and it started piling up losses. Now, unlike

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Speaker 2: with profits, where it has to hand it over to

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Speaker 2: the Treasury, if the FED has a loss, it isn't

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Speaker 2: owed money from the Treasury. Instead, the FED just keeps

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Speaker 2: mounting losses more and more and more on its balance

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Speaker 2: sheet until it stops losing money, and then as it

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Speaker 2: starts earning profits again, it essentially pays down the losses,

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Speaker 2: if you will. And then finally, once they're gone and

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Speaker 2: it's still earning money, the FED will resume making payments

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Speaker 2: to the Treasury. And that might happen for a week

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Speaker 2: or two. Right, that's not uncommon during the course of

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Speaker 2: the fed one hundred plus year history. But what has

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Speaker 2: never happened before is to have sustained losses of this nature.

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Speaker 2: And it is all due to complete and total monetary

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Speaker 2: mismanagement at the FED. And it is all the more

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Speaker 2: reason why not just Powell, but frankly the entire board

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Speaker 2: of Governors, all of them need to go.

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Speaker 1: So I guess we start with asking a basic question,

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Speaker 1: how does this happen? Great? Great question?

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Speaker 2: How do the people with a money printer somehow lose money? Right,

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Speaker 2: that's where we're at today. So basically, the FED has

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Speaker 2: both interests that it's receiving an interest that it's paying,

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Speaker 2: kind of like a bank. And in the same way

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Speaker 2: that we had a regional bank crisis back in the

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Speaker 2: spring of twenty twenty three, including the second largest bank

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Speaker 2: failure in American history. The FED put itself into the

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Speaker 2: exact same situation it put the banking system in general,

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Speaker 2: where it loaded up its own balance sheet with very

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Speaker 2: low interest rate assets. Whether those were mortgage backed securities,

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Speaker 2: whether those were treasury bonds, whatever the case may be,

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Speaker 2: these were things that paid very very low interest rates,

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Speaker 2: maybe two or three percent. Then as interest rates rose,

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Speaker 2: which was because of the FED, then interest rates on liabilities,

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Speaker 2: things that the FED is paying out every day went

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Speaker 2: up dramatically.

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Speaker 1: They went up.

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Speaker 2: From a fraction of a percent to over five percent

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Speaker 2: in some instances. So now the FED and again many

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Speaker 2: banks like Silicon Valley Bank were and are in a

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Speaker 2: position of paying four or five percent on liabilities while

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Speaker 2: only earning two or three percent on assets. Obviously, that's

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Speaker 2: a path to insolvency. It's negative cash flow. And if

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Speaker 2: you're a bank, sure enough, that can turn into bank.

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Speaker 2: If you're the FED, of course, you can just print

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Speaker 2: the money and create inflation and accrue these massive assets,

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Speaker 2: hundreds of billions of dollars worth. And you know, to

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Speaker 2: be clear, this this is not without impact here. It

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Speaker 2: has impact in terms of the Fed's ability to conduct

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Speaker 2: monetary policy. It also has an impact on taxpayers, Tony,

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Speaker 2: because every dime that the FED is not sending to

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Speaker 2: the treasury adds to the deficit and ultimately has to

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Speaker 2: be made up for by taxpayers. This is and these

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Speaker 2: are not trivial amounts here. This is hundreds of billions

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Speaker 2: of dollars. Let's get in payments that have not gone

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Speaker 2: to the treasury since the fall of twenty twenty two.

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Speaker 1: And let's get into this because I was looking at

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Speaker 1: these these posts you put on Twitter X and I'm like,

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Speaker 1: you're outlining a scandal as far as I'm concerned. Talking

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Speaker 1: to ej Antonia, the Heritage Foundation, Heritage dot org. Here's

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Speaker 1: the here's the second one right here. This is these

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Speaker 1: the sources of the Board of Governors of the Federal

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Speaker 1: Reserve System UH daily interest payments in millions of dollars.

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Speaker 1: So you've got an area in green, which is smaller,

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Speaker 1: and an area in gray, and it looks like a

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Speaker 1: mountain behind a hill. That's what it looks like. The

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Speaker 1: green is reverse repurchase agreements and the gray is interest

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Speaker 1: on the reserves. And I at that moment realized why

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Speaker 1: I drink bourbon? I have no idea what I'm looking

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Speaker 1: at here. So you're discussing this issue that we're having,

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Speaker 1: how does this chart now apply to it?

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Speaker 2: So these are the two big expenses, Tony that the

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Speaker 2: FED is facing, and it need not have them at all.

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Speaker 2: This was a complete mistake by the FED to go

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Speaker 2: down both of these roads. In the case of interest

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Speaker 2: on reserves, that was a policy they started in March

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Speaker 2: of twenty twenty, in the midst of all the chaos

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Speaker 2: that was breaking because of COVID, the FED quietly made

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Speaker 2: this change where instead of banks being required to keep

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Speaker 2: money at the FED, in other words, they have to

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Speaker 2: keep a certain percentage of their cash parked at the

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Speaker 2: FED what they call reserves, that was simply removed. Banks

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Speaker 2: don't have to keep anything in reserve. Theoretically, if you

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Speaker 2: go today and you put a dollar on deposit at

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Speaker 2: a bank, they can turn around and lend out the

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Speaker 2: entirety of that dollar. They'll still tell you that your

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Speaker 2: dollar is there on deposit and you can come get

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Speaker 2: it any time you want. But the reality is they

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Speaker 2: can lend out the entirety, all one hundred cents of

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Speaker 2: that dollar, whereas previously they would have been limited to

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Speaker 2: say ninety cents or eighty cents or seventy five cents,

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Speaker 2: depending on the time period. So whatever the case, the

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Speaker 2: only way that the FED now entices banks to keep

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Speaker 2: money parked at the FED is by paying them interest

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Speaker 2: on it. They're also using something called reverse repurchase agreements,

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Speaker 2: which are essentially short term loans to the FED. That

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Speaker 2: the FED is using that as another mechanism to soak

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Speaker 2: up excess liquidity, and they're paying interest to financial institutions

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Speaker 2: using both of these mechanis.

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Speaker 1: So work with me here. We're paying insane amounts of

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Speaker 1: interest via the FED, or I should say the FED

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Speaker 1: is paying insane amount of interest and we're not. The

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Speaker 1: FED is not paying back the Treasury the way it's supposed.

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Speaker 2: To exactly, so, instead of making payments to the Treasury

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Speaker 2: on behalf of taxpayers, the FED is making payments to

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Speaker 2: Wall Street to the tune of four hundred and fifty

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Speaker 2: billion dollars or million dollars a day. Again, it's over

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Speaker 2: four hundred and fifty million dollars every day. And actually

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Speaker 2: part of the scandal here Tony is the fact that

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Speaker 2: if you look at something like the reverse repurchase agreement marketplace,

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Speaker 2: more than three quarters of those payments don't even go

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Speaker 2: to American firms. They're foreign financial institutions. And we don't

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Speaker 2: even know how much of the interest on reserve payments

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Speaker 2: are going to foreign institutions directly or indirectly, because that

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Speaker 2: information is not disclosed by the FED. So, I mean,

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Speaker 2: it is an absolute scandal that the FED has basically

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Speaker 2: turned the monetary system now into a way to give

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Speaker 2: free money to these different financial firms, many of whom

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Speaker 2: aren't even American.

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Speaker 1: So that in and of itself is a national security concern,

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Speaker 1: which I would expect and want to hear President Trump

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Speaker 1: and others talk about. But I want to talk about

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Speaker 1: where the actual effect is on Americans. Right, we understand

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Speaker 1: that this is ugly, We understand that this could very well.

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Speaker 1: We would consider this without saying, knowing being able to

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Speaker 1: cite any statute, this is criminal, is what we would say.

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Speaker 1: But explain to me how this affects everyday Americans and

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Speaker 1: our investments, whether it be four one K, our basic

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Speaker 1: Vanguard Fund, whatever the case may be.

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Speaker 2: Well, remember every time the FED makes one of these payments,

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Speaker 2: every time it sends money out the door, where is

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Speaker 2: that money coming from? Its literally just creating it. This

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Speaker 2: is an inflationary pressure that the FED continues to pump

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Speaker 2: into the economy. And so to counter it, what have

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Speaker 2: they done. They've hiked interest rates. And granted those are

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Speaker 2: short term rates, I get it, but they have an

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Speaker 2: effect on longer term rates as well. Part of the

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Speaker 2: reason why credit is so expensive for consumers for businesses

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Speaker 2: is because the FED continues allocating capital away from Main

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Speaker 2: Street and to Wall Street and frankly to K Street

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Speaker 2: in DC. In other words, they're helping to finance government

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Speaker 2: instead of allowing the market to finance Main Street. It's

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Speaker 2: not an exaggeration. The FED is a big reason why

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Speaker 2: you are paying more when you try to get a

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Speaker 2: mortgage while the interest rate is higher, while you're paying

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Speaker 2: more on a car payment, on the interest on your

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Speaker 2: credit cards, those monthly finance charges, I mean, you name it,

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Speaker 2: student loans, the list just goes on and on. While

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Speaker 2: all these different forms of financing, and that's just the consumer,

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Speaker 2: then you have obviously the business, and too a business

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Speaker 2: trying to get credit to finance its inventory every single month, right,

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Speaker 2: A lot of businesses have to finance the inventory they buy,

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Speaker 2: and then as they sell off that inventory, over the

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Speaker 2: month they from the revenue, they pay down what they

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Speaker 2: owe on those loans. All of that is more expensive.

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Speaker 2: Credit is more scarce and more expensive because of the

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Speaker 2: FED today and because it continues again to allocate capital

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Speaker 2: away from Main Street and to Wall Street.

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Speaker 1: Talking to EJ. Antony, Chief economists at the Heritage Foundation

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Speaker 1: Heritage dot org, your post was just fire everybody on

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Speaker 1: the Board of governors. This is the Wall Street Journal.

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Speaker 1: Trump will nominate economic advisor Stephen Moran. Is it Moran

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Speaker 1: or Myron? That's a good question.

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Speaker 2: I think it's Moran.

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Speaker 1: I think I too. I've and we'll leave it there,

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Speaker 1: and we're not trying to disrespect. We've got it wrong.

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Speaker 1: To the FED vacancy, you've got somebody leaving the Federal Reserve,

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Speaker 1: one of the governors leaving, and so you've got Moran,

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Speaker 1: who is the head of the White House Council of

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Speaker 1: Economic Advisors, who Trump is saying should take over here.

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Speaker 1: And this is quite clearly a step towards putting more

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Speaker 1: pressure on Jerome Powell to walk away. And maybe this

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Speaker 1: is an early indicator of who it is Trump wants

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Speaker 1: to run the Federal Reserve. I don't know much about

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Speaker 1: the man. But is this pick an indication of where

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Speaker 1: the Board of Governors might go and applying pressure to

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Speaker 1: Powell or maybe making the changes you want them to

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Speaker 1: make regarding these interest payments and the insanity of this

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Speaker 1: financial system.

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Speaker 2: Well, I'm not sure, unfortunately, Tony. I think this was

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Speaker 2: basically just the safe pick. Basically what happened here is

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Speaker 2: because one of the members of the board resigned, Trump

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Speaker 2: picked somebody to fill the vacancy for the rest of

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Speaker 2: the year, so, you know, essentially just for the next

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Speaker 2: several months, and then in twenty twenty six he's going

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Speaker 2: to have to name somebody else as well as in

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Speaker 2: May of twenty twenty six, you'll have to name someone

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Speaker 2: as FED chair. So this doesn't really tell us necessarily

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Speaker 2: which direction the next member and the next chair are

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Speaker 2: going to go in terms of which direction they'll try

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Speaker 2: to take the FED and what kind of reforms they'll

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Speaker 2: try to put in place. I think what the President

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Speaker 2: did here was pick somebody who they knew was safe again,

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Speaker 2: who wouldn't make any any kind of catastrophic mistakes over

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Speaker 2: the next few months. That's not to disparage the man, right,

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Speaker 2: I'm not trying to diminish him or anything like that.

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Speaker 2: I'm just saying that this was a safe person to

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Speaker 2: put in while the vetting process is still going on

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Speaker 2: for a longer term.

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Speaker 1: Pick.

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Speaker 2: So until that is done, and until we actually have

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Speaker 2: some names again for both the chair and for the

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Speaker 2: board vacancy, then we'll have a better sense of which

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Speaker 2: direction the FED is going to go. But you know,

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Speaker 2: so far, a lot of the names I've heard, like

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Speaker 2: Kevin Walsh, for example, he really, i think understands the

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Speaker 2: kinds of reforms that do need to be put in

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Speaker 2: place and the kinds of mistakes that have been made

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Speaker 2: at the FED since the beginning of twenty twenty and

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Speaker 2: how to reverse them.

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Speaker 1: More importantly, we got more of this conversation coming up,

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Speaker 1: specifically the story about Toyota. Are the tariffs about to

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Speaker 1: be pushed to us? And does that change everything for

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Speaker 1: Midwest Main Street while having no effect on Wall Street.

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Speaker 1: Keep it here more with Eja Antoni, chief economist of the

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Speaker 1: Heritage Foundation. I'm Tony Katz. This is Tony Katz today.

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Speaker 1: So it seems that the Federal Reserve really are a

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Speaker 1: bunch of fools, And certainly when you take a look

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Speaker 1: at the interest payments being made and how they're engaging

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Speaker 1: the idea of money in general. A lot of people

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Speaker 1: are making money in an A and US and as

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Speaker 1: foreign nations. We've got a real problem. Tony Katz, Tony

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Speaker 1: Kats today, good to be with you. This as EJ

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Speaker 1: and Tony economists chief economist that the Heritage Foundation is

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Speaker 1: walking through this. This is the scandal like real world

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Speaker 1: class USDA choice. How does America get through this scandal?

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Speaker 1: But put U pin in it. I can't believe I

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Speaker 1: just said that because I needed to get to this

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Speaker 1: part two conversation with EJ and Tony about tariffs, what

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Speaker 1: we're about to be spending or are we not? And

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Speaker 1: the story about Toyota. I want to now take it

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Speaker 1: to where I started this conversation about where this economy is.

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Speaker 1: Do we think this is all moving in a good direction?

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Speaker 1: Should we be excited about this? And this brought a

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Speaker 1: conversation about Toyota, which has changed its guidance for the

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Speaker 1: rest of the year. Wishing their guidance. They say they're

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Speaker 1: going to have a give or take a ten billion

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Speaker 1: dollar tariff hit. And this leads to the conversation of

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Speaker 1: we see the tariffs in place the revenue being taken in,

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Speaker 1: which is tax dollars. Yet we see a GDP at

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Speaker 1: three percent, and these things don't seem to jive. Maybe

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Speaker 1: it's because companies are absorbing the tariffs as opposed to

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Speaker 1: passing them along, and that can't last forever. This story

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Speaker 1: of Toyota taking the basically ten billion dollar tariff hit

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Speaker 1: slashing their guidance, Is this, in your view, without having

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Speaker 1: any expertise on what Toyota is doing, but as a concept,

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Speaker 1: is this, in your view the start of a chain

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Speaker 1: of dominoes regarding tariff costs being moved on to the

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Speaker 1: consumer or is every case an isolated case?

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Speaker 2: Well, Tony, I'd say it's not just Toyota. The data

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Speaker 2: have kind of flipped just in the last really ten

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Speaker 2: fourteen day, probably fourteen days, let's say, the last two weeks.

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Speaker 2: We are for the first time this year, getting a

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Speaker 2: lot more data saying that these costs are going to

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Speaker 2: get passed on to consumers, whereas previously that's not at

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Speaker 2: all what the data is indicating. And so so many

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Speaker 2: of the you know, of the pundits who said, oh,

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Speaker 2: Americans are going to pay for all this blah blah blah.

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Speaker 2: The data just didn't indicate that at all. In fact,

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Speaker 2: what they indicated was that businesses, whether it's the exporter

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Speaker 2: or maybe it's the importer, or even like the wholesaler,

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Speaker 2: businesses were all content to just eat the cost. Now,

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Speaker 2: my theory behind that is that a lot of these

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Speaker 2: firms were thinking these are one time cost increases and

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Speaker 2: then the trade deals are going to negotiate them all away,

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Speaker 2: so we'll eat the cost in order to not lose

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Speaker 2: market share. Right, we don't want to have a big,

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Speaker 2: big price fluctuation passed on to consumers because then we

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Speaker 2: might lose some people. However, as it becomes clearer that

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Speaker 2: these tariffs probably aren't going away, more and more businesses

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Speaker 2: do seem content to pass the cost on to consumers. Now,

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Speaker 2: that doesn't mean everything's going to get more expensive. Imports

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Speaker 2: are actually a relatively small part of the American economy.

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Speaker 2: We are compared to most other nations around the world.

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Speaker 2: We have very very little of our economy that's import related,

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Speaker 2: and in fact, half of what we import we just

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Speaker 2: turn around and resell. So we buy Canadian oil, for example,

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Speaker 2: crude oil, and then we refine it and we sell

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Speaker 2: the gasoline right back to the Canadians, So most of

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Speaker 2: that doesn't even you know, doesn't even stay here and

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Speaker 2: won't affect consumer prices in the US. But again we

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Speaker 2: are seeing for the first time data that's indicating that

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Speaker 2: some of these higher import costs are going to be

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Speaker 2: passed on to consumers. Now, you know, how does this

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Speaker 2: jive with the broader economy. One of the things to

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Speaker 2: point out here, Tony is the fact that just earlier

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Speaker 2: this morning there was a report out that apparently the

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Speaker 2: rates with Toyota are going to now be renegotiated. In

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Speaker 2: other words, we're going to probably see a lower rate

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Speaker 2: applied to Japanese automobiles than what is currently being speculated.

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Speaker 2: So I mean, this is it's ka to say the least, right,

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Speaker 2: everything is up in the air. Unfortunately, this is part

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Speaker 2: of the nature of negotiations, especially something as complex and

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Speaker 2: complicated and frankly convoluted as the international trading system. So

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Speaker 2: I think we're probably stuck with that, with that lack

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Speaker 2: of guidance for a while now, which means companies forward

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Speaker 2: guidance is likely going to keep changing.

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Speaker 1: But again, just like we ask about what's going on

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Speaker 1: with the FED, how does this affect US. Certainly, if

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Speaker 1: the tariff gets passed along, the good is more expensive

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Speaker 1: to us. We understand that basic concept. The tariffs are taxes,

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Speaker 1: unquestionable as a tactic to try and get a better

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Speaker 1: trade deal. That's one thing. But President Trump is proven

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Speaker 1: in these trade deals that the tariffs will remain, which

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Speaker 1: means all of these goods are more expensive. And these goods,

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Speaker 1: while it might not make up much of what we

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Speaker 1: have in total our important conversation in terms of imports

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Speaker 1: we take in the US, it still does affect the

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Speaker 1: things that are important. So the fact that it's a smaller,

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Speaker 1: it's not a great percentage compared to other nations, is

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Speaker 1: inconsequential to whether or not we actually pay more for

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Speaker 1: the good. The question is how does this now play

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Speaker 1: in the conversation of Wall Street versus Midwest main Street?

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Speaker 1: Because I can do basic math with the EJ, which is,

433
00:25:21,800 --> 00:25:24,560
Speaker 1: if things cost me more, they cost me more, and

434
00:25:24,600 --> 00:25:26,480
Speaker 1: so it costs more to get the raw good to

435
00:25:26,520 --> 00:25:29,199
Speaker 1: create the good that I then sell, whether it costs

436
00:25:29,200 --> 00:25:31,280
Speaker 1: to me more to get the finished good that I

437
00:25:31,320 --> 00:25:33,920
Speaker 1: then utilize for my family, my business, whatever I am

438
00:25:33,960 --> 00:25:38,119
Speaker 1: paying more. Wall Street may not have those concerns but

439
00:25:38,240 --> 00:25:41,800
Speaker 1: certainly it should be concerned if people can't follow their

440
00:25:41,840 --> 00:25:45,399
Speaker 1: investment strategies because they're paying more for other things. What's

441
00:25:45,440 --> 00:25:48,520
Speaker 1: the divide here in what we're seeing and what you're

442
00:25:48,560 --> 00:25:51,679
Speaker 1: talking about between Wall Street and Midwest Main Street?

443
00:25:53,080 --> 00:25:55,360
Speaker 2: Great, great question. I mean, the big thing that Wall

444
00:25:55,440 --> 00:25:59,400
Speaker 2: Street is concerned about essentially is corporate bottom line. Right.

445
00:25:59,440 --> 00:26:01,280
Speaker 2: In other words, our corporation is going to have to

446
00:26:01,320 --> 00:26:03,359
Speaker 2: eat these costs or are they going to be able

447
00:26:03,680 --> 00:26:06,639
Speaker 2: to pass them along to consumers? And even if the

448
00:26:06,680 --> 00:26:10,399
Speaker 2: corporation can't pass the cost on to consumers, is the

449
00:26:10,440 --> 00:26:14,240
Speaker 2: corporation let's say, I'm sorry, Let's say the corporation rather

450
00:26:14,320 --> 00:26:17,000
Speaker 2: can pass the cost on to consumers, but now because

451
00:26:17,000 --> 00:26:19,920
Speaker 2: of higher prices, they do less business and so their

452
00:26:19,920 --> 00:26:23,840
Speaker 2: bottom line goes down. That way, just because a corporation

453
00:26:24,119 --> 00:26:27,119
Speaker 2: is able to pass on costs does not mean that

454
00:26:27,160 --> 00:26:30,760
Speaker 2: its bottom line will be unaffected. So Wall Street obviously

455
00:26:30,840 --> 00:26:34,200
Speaker 2: is concerned from that standpoint and is going to change

456
00:26:34,280 --> 00:26:36,720
Speaker 2: who it thinks are the winners and losers in terms

457
00:26:36,800 --> 00:26:39,040
Speaker 2: of investments, based on who it thinks are going to

458
00:26:39,080 --> 00:26:42,080
Speaker 2: be the winners and losers in terms of tariffs. I

459
00:26:42,119 --> 00:26:46,200
Speaker 2: will say, though, part of the difficulty here in figuring out, okay,

460
00:26:46,200 --> 00:26:48,439
Speaker 2: what is the impact to main Street? In other words,

461
00:26:48,680 --> 00:26:51,560
Speaker 2: are you actually going to see prices go up? Part

462
00:26:51,640 --> 00:26:53,920
Speaker 2: of the difficulty, Tony, is the fact that at the

463
00:26:53,960 --> 00:26:56,400
Speaker 2: same time we have this upward pressure on prices because

464
00:26:56,440 --> 00:26:59,639
Speaker 2: of tariffs, you have downward pressure on prices because of

465
00:26:59,720 --> 00:27:03,840
Speaker 2: de regulation and because of provisions in the tax bill

466
00:27:03,920 --> 00:27:07,119
Speaker 2: like bringing back full expensing. For example, that's going to

467
00:27:07,119 --> 00:27:10,080
Speaker 2: be a huge tax cut that's going to save literally

468
00:27:10,160 --> 00:27:12,720
Speaker 2: over one hundred billion dollars just in its first year.

469
00:27:12,760 --> 00:27:16,200
Speaker 2: Probably well, that's going to offset one hundred billion dollars

470
00:27:16,440 --> 00:27:20,200
Speaker 2: in tariff revenue. So again, it's it remains to be

471
00:27:20,280 --> 00:27:23,360
Speaker 2: seen which of these effects is going to outweigh the other,

472
00:27:23,359 --> 00:27:27,439
Speaker 2: in other words, which magnitude is greater. So at this point,

473
00:27:27,480 --> 00:27:30,320
Speaker 2: even though we are seeing in the data business is

474
00:27:30,320 --> 00:27:33,400
Speaker 2: saying yep, we're finally having to pass this along, we're

475
00:27:33,520 --> 00:27:35,760
Speaker 2: still not sure if that means the consumer is going

476
00:27:35,840 --> 00:27:38,679
Speaker 2: to pay more, or if those price increases will be

477
00:27:38,720 --> 00:27:40,159
Speaker 2: offset by price decreases.

478
00:27:40,200 --> 00:27:45,000
Speaker 1: Elsewhere do people visualize it like that? I get your argument.

479
00:27:45,440 --> 00:27:48,000
Speaker 1: If the one big, beautiful bill allows you to have

480
00:27:48,000 --> 00:27:51,520
Speaker 1: one hundred percent expensing, you're like hot Digity, and you

481
00:27:51,600 --> 00:27:54,359
Speaker 1: might be doing some more buying because you allowed yourself

482
00:27:54,400 --> 00:27:57,239
Speaker 1: to do the expensing out of it, and maybe what

483
00:27:57,320 --> 00:28:01,160
Speaker 1: you spend on a tariff side is even dwarfed by

484
00:28:01,200 --> 00:28:04,120
Speaker 1: what you were being able to expense out. People could

485
00:28:04,200 --> 00:28:08,040
Speaker 1: understand that very very base concept of I'm able to

486
00:28:08,040 --> 00:28:11,439
Speaker 1: expend these things. But do they equate the two in

487
00:28:11,560 --> 00:28:14,040
Speaker 1: their heads? Do they really go on some level of

488
00:28:14,080 --> 00:28:18,639
Speaker 1: spending binge as I just described it when they know

489
00:28:18,720 --> 00:28:21,600
Speaker 1: what they're buying still costs more. They can still feel

490
00:28:21,600 --> 00:28:25,360
Speaker 1: it every single day every time they buy everything.

491
00:28:26,640 --> 00:28:28,840
Speaker 2: So, Tony, I think it's worth it to go back

492
00:28:28,880 --> 00:28:33,480
Speaker 2: to the first Trump administration and the Biden administration to

493
00:28:33,840 --> 00:28:36,840
Speaker 2: use examples here. In the case of the Bid administration,

494
00:28:37,160 --> 00:28:39,680
Speaker 2: people's the average American, at least not everybody, but the

495
00:28:39,720 --> 00:28:43,520
Speaker 2: average Americans weekly paycheck exploded. I mean, wages were up

496
00:28:43,600 --> 00:28:47,400
Speaker 2: like twenty percent in four years. That's a phenomenal rate

497
00:28:47,400 --> 00:28:51,480
Speaker 2: of increase. But what the Americans could actually buy with

498
00:28:51,520 --> 00:28:55,000
Speaker 2: their weekly paychecks didn't go up. It went down pretty substantially.

499
00:28:55,040 --> 00:28:58,720
Speaker 2: After four years, it was down four percent. So that

500
00:28:59,000 --> 00:29:01,960
Speaker 2: is what Americans really care about, not even necessarily how

501
00:29:02,040 --> 00:29:04,480
Speaker 2: much money do I make. What can I do with

502
00:29:04,560 --> 00:29:07,120
Speaker 2: the money I'm making? What can I buy with that

503
00:29:07,200 --> 00:29:12,080
Speaker 2: weekly paycheck? Conversely, under the first Trump administration, sure some

504
00:29:12,160 --> 00:29:16,240
Speaker 2: of the administration's policies actually increased prices, like the steel tariffs,

505
00:29:16,280 --> 00:29:20,320
Speaker 2: for example, but that was much more than offset by

506
00:29:20,400 --> 00:29:23,640
Speaker 2: the regulatory reform, by the huge tax reform that was

507
00:29:23,720 --> 00:29:27,120
Speaker 2: the TCJA in the end of twenty seventeen, and so

508
00:29:27,720 --> 00:29:31,000
Speaker 2: even though people in some instances paid more for things,

509
00:29:31,360 --> 00:29:34,640
Speaker 2: other things cost less. Right we had energy massive increase

510
00:29:34,680 --> 00:29:38,560
Speaker 2: in energy production that brought down a lot of prices. Again,

511
00:29:38,600 --> 00:29:42,240
Speaker 2: you had competing effects here, People's paychecks were getting bigger,

512
00:29:42,360 --> 00:29:45,360
Speaker 2: Inflation wasn't even an issue. So at the end of

513
00:29:45,360 --> 00:29:48,960
Speaker 2: the day, people were much much better off because of

514
00:29:49,080 --> 00:29:52,240
Speaker 2: the net effect of those policies, even if not every

515
00:29:52,240 --> 00:29:55,200
Speaker 2: single one of them had a positive effect. My guess

516
00:29:55,240 --> 00:29:57,640
Speaker 2: is that's what we're going to see this time around

517
00:29:57,640 --> 00:30:00,320
Speaker 2: as well. The reason I say it's a guess is

518
00:30:00,360 --> 00:30:03,240
Speaker 2: because the scope of the tariffs right now are so

519
00:30:03,520 --> 00:30:06,440
Speaker 2: much larger than they were in the first Trump administration.

520
00:30:06,680 --> 00:30:10,120
Speaker 1: So now I ask you for your opinion, and you

521
00:30:10,160 --> 00:30:14,560
Speaker 1: shouldn't ask economists for their opinions that it's wrong it's rude.

522
00:30:14,600 --> 00:30:17,920
Speaker 1: But here I am talking to EJN. Tony, chief economists

523
00:30:17,920 --> 00:30:22,160
Speaker 1: at the Heritage Foundation Heritage dot org. You're crystal balling

524
00:30:22,200 --> 00:30:25,880
Speaker 1: this thing, right. You're looking into the future. The conversation

525
00:30:25,920 --> 00:30:28,120
Speaker 1: we just had about the FED, the conversation we're having

526
00:30:28,160 --> 00:30:31,840
Speaker 1: about Midwest main Street. You look a year from now,

527
00:30:32,560 --> 00:30:33,719
Speaker 1: do you like what you see?

528
00:30:35,560 --> 00:30:39,360
Speaker 2: I do largely from an investment standpoint, and a lot

529
00:30:39,400 --> 00:30:42,360
Speaker 2: of people hear investment and they think, Okay, that's Wall Street,

530
00:30:42,400 --> 00:30:47,120
Speaker 2: not main Street. No, no, No, investment is entirely main Street.

531
00:30:47,200 --> 00:30:50,280
Speaker 2: The vast majority of Americans, for example, own the S

532
00:30:50,320 --> 00:30:53,600
Speaker 2: and P five hundred Because a lot of Americans, even

533
00:30:53,600 --> 00:30:55,800
Speaker 2: if they're not let's say, day trading stock, they don't

534
00:30:55,800 --> 00:31:00,280
Speaker 2: have like a one of those self managed brokerage accounts.

535
00:31:00,320 --> 00:31:02,920
Speaker 2: Almost everybody's got a four to one K or a

536
00:31:02,960 --> 00:31:07,080
Speaker 2: pension plan or some kind of retirement savings that essentially

537
00:31:07,120 --> 00:31:08,720
Speaker 2: have the S and P five hundred in it. So

538
00:31:08,760 --> 00:31:11,640
Speaker 2: when we talk about a big stock index like that,

539
00:31:11,760 --> 00:31:15,600
Speaker 2: a very diversified stock index, that is main Street. And

540
00:31:15,680 --> 00:31:18,640
Speaker 2: so when we talk about investment in those companies, again,

541
00:31:18,680 --> 00:31:24,120
Speaker 2: that's main Street. Also, what is investment? Investment means building factories.

542
00:31:24,440 --> 00:31:27,880
Speaker 2: It means more plants and equipment. It means training people

543
00:31:27,920 --> 00:31:30,920
Speaker 2: on software and developing software. These are all activities that

544
00:31:31,000 --> 00:31:34,520
Speaker 2: are done on main street. And it is that kind

545
00:31:34,560 --> 00:31:37,520
Speaker 2: of investment something. It's a category we like to call

546
00:31:37,600 --> 00:31:41,920
Speaker 2: fixed private investment. That is where you get long run

547
00:31:41,960 --> 00:31:45,440
Speaker 2: economic growth. When that goes down, long run economic growth suffers.

548
00:31:45,480 --> 00:31:49,560
Speaker 2: Sure enough, when different provisions of the original tax cuts

549
00:31:49,560 --> 00:31:54,880
Speaker 2: and jobs expired under the Biden administration and it hurt investment,

550
00:31:55,000 --> 00:31:58,680
Speaker 2: you then saw economic growth slow pretty substantially. And so

551
00:31:58,920 --> 00:32:02,480
Speaker 2: as we now have all these different provisions in place

552
00:32:02,640 --> 00:32:06,760
Speaker 2: which are going to increase investment, that will increase productivity,

553
00:32:06,960 --> 00:32:10,520
Speaker 2: It will increase economic activity, it will increase wage growth.

554
00:32:10,880 --> 00:32:13,320
Speaker 2: All of these things are very very positive, not just

555
00:32:13,400 --> 00:32:17,960
Speaker 2: for today, but for the long run economic prospects of

556
00:32:18,000 --> 00:32:21,360
Speaker 2: the country. And you're seeing not only domestic investment already

557
00:32:21,360 --> 00:32:24,800
Speaker 2: get started because of the tax law that was just passed,

558
00:32:25,040 --> 00:32:28,920
Speaker 2: but you're also seeing foreign investment pour into the country

559
00:32:28,960 --> 00:32:31,880
Speaker 2: as well as a result of the different trade negotiation.

560
00:32:32,080 --> 00:32:35,320
Speaker 2: So the very short answer to your question, Tony after

561
00:32:35,360 --> 00:32:38,520
Speaker 2: that rambling is to say, yes, a year from now,

562
00:32:38,760 --> 00:32:43,000
Speaker 2: I am very very bullish because of the investment outlook

563
00:32:43,280 --> 00:32:44,360
Speaker 2: on the US economy.

564
00:32:44,600 --> 00:32:47,160
Speaker 1: It ain't rambling when you can explain your position. EJ

565
00:32:47,360 --> 00:32:52,000
Speaker 1: and Tony chief economist, the Heritage Foundation real EJ and

566
00:32:52,120 --> 00:32:54,680
Speaker 1: Tony there on the Twitter acts you should follow him.

567
00:32:55,000 --> 00:32:57,840
Speaker 1: Do that immediately. More coming up, Bob, Tony Katz. This

568
00:32:57,920 --> 00:33:00,520
Speaker 1: is Tony Katz today. Let me start. I'm saying I

569
00:33:00,520 --> 00:33:02,840
Speaker 1: have no idea who this is. I have no idea

570
00:33:02,960 --> 00:33:06,760
Speaker 1: who this woman is. Who is laying in bed in

571
00:33:06,920 --> 00:33:11,280
Speaker 1: a low cut shirt, showing off a tremendous amount of

572
00:33:11,280 --> 00:33:16,040
Speaker 1: cleavage while draped in a kafea and saying this.

573
00:33:16,280 --> 00:33:17,880
Speaker 3: You guys, I need to talk to you about something

574
00:33:17,960 --> 00:33:21,400
Speaker 3: super serious, and it's this right here. Like burning the

575
00:33:21,480 --> 00:33:24,600
Speaker 3: American flag, it's just well, lovey, it's a beautiful site,

576
00:33:24,640 --> 00:33:27,360
Speaker 3: but it's not enough. We need to burn down every

577
00:33:27,400 --> 00:33:31,200
Speaker 3: capitalist and imperialist system that exists. We need to burn

578
00:33:31,480 --> 00:33:36,720
Speaker 3: the US government aka global terrorist organization down to the ground.

579
00:33:36,760 --> 00:33:40,520
Speaker 3: We can no longer allow the worst, most violent, evil

580
00:33:40,640 --> 00:33:44,080
Speaker 3: disgusting people to lead us because they're going to continue

581
00:33:44,080 --> 00:33:47,480
Speaker 3: making the world a waking nightmare for everybody. So go

582
00:33:47,480 --> 00:33:53,000
Speaker 3: ahead and keep burning the disgusting, bloodstained, genocidal United States

583
00:33:53,040 --> 00:33:55,760
Speaker 3: flag that was created by slave owners. I could give

584
00:33:55,840 --> 00:33:58,160
Speaker 3: two shits, but also make sure you're doing your part

585
00:33:58,200 --> 00:34:00,880
Speaker 3: to dismantle all of the system that make all of

586
00:34:00,880 --> 00:34:04,520
Speaker 3: these atrocities in the world possible. Thank you in Free Palestine.

587
00:34:04,680 --> 00:34:08,239
Speaker 4: It's a crazy video because if she was in Gaza,

588
00:34:08,320 --> 00:34:12,080
Speaker 4: she'd be stoned to death for wearing this outfit or

589
00:34:12,160 --> 00:34:14,759
Speaker 4: speaking out about her quote unquote government that way.

590
00:34:15,200 --> 00:34:18,960
Speaker 1: Tony Kats, Tony Kats today, the pleasure of America is

591
00:34:19,000 --> 00:34:22,400
Speaker 1: that she could say that in her own home, surrounded

592
00:34:22,400 --> 00:34:26,160
Speaker 1: by pillows and a beautiful headboard, and nothing's gonna happen

593
00:34:26,239 --> 00:34:29,680
Speaker 1: to her. Don't get me wrong, it's disgusting. She's actually

594
00:34:29,719 --> 00:34:33,160
Speaker 1: advocating for violence here, and maybe that could be an issue,

595
00:34:33,280 --> 00:34:36,160
Speaker 1: but she isn't gonna die. If she was in Gaza,

596
00:34:36,280 --> 00:34:38,600
Speaker 1: she would die. If she was in a Muslim country,

597
00:34:38,800 --> 00:34:41,960
Speaker 1: she'd be dead for what she is wearing. And here

598
00:34:42,080 --> 00:34:46,480
Speaker 1: she is. America is so terrible. America's awesome. And for

599
00:34:46,600 --> 00:34:50,240
Speaker 1: all the Islamis out there and all the ridiculous fools

600
00:34:50,400 --> 00:34:54,880
Speaker 1: who support these terrorists that are Hamas, don't you know

601
00:34:55,000 --> 00:34:56,840
Speaker 1: that we think you're dumb. Don't you know that you

602
00:34:56,960 --> 00:34:59,680
Speaker 1: are dumb? We're in the right you're in the wrong,

603
00:35:00,080 --> 00:35:03,280
Speaker 1: the good guys. You're the bad guys. We're decent. You're

604
00:35:03,360 --> 00:35:09,120
Speaker 1: just weird. America imperialist and oh, of course anti Their

605
00:35:09,120 --> 00:35:12,840
Speaker 1: hand's always anti capitalists while they're on a smartphone creating

606
00:35:12,880 --> 00:35:16,560
Speaker 1: this video. And she's wearing this jewelry, and where do

607
00:35:16,600 --> 00:35:19,480
Speaker 1: you I think the thread counts on the sheets is

608
00:35:19,520 --> 00:35:22,000
Speaker 1: like five hundred. These are some fancy sheets. I don't

609
00:35:22,000 --> 00:35:24,280
Speaker 1: know what a fancy thread count is, but I assume

610
00:35:24,520 --> 00:35:27,400
Speaker 1: she does. And we're the bad guys. Now, you're the

611
00:35:27,440 --> 00:35:30,240
Speaker 1: bad guys, and we should be clear. You're the bad guys.

612
00:35:31,080 --> 00:35:34,160
Speaker 1: If you support a Moss bad guy, if you support

613
00:35:34,239 --> 00:35:38,040
Speaker 1: Islamist's bad guy. If you think America is the problem

614
00:35:38,080 --> 00:35:41,319
Speaker 1: in the world while you sit and complain, while you're

615
00:35:41,320 --> 00:35:45,160
Speaker 1: on American soil knowing you'll be safe, you're the problem.

616
00:35:45,760 --> 00:35:51,560
Speaker 1: They're the problem problem. It's remarkable, but it's also part

617
00:35:51,600 --> 00:35:55,960
Speaker 1: for the course. Fools will be fools, guys. We just

618
00:35:56,000 --> 00:35:57,920
Speaker 1: have to make sure they never get power and never

619
00:35:57,960 --> 00:36:01,520
Speaker 1: win elections. Find everything at Tony cats dot com. Monday,

620
00:36:01,520 --> 00:36:02,440
Speaker 1: everyone take out